Energy Fundamentals
in Mexico

Mexican Power System

The Mexican Power System is formed by four independent power systems: SIN (National Interconnected System) that covers most of Mexican Territory, except the Baja California Peninsula; and three systems in the Baja Area: Baja, Baja Sur and Mulegé, these two last are isolated systems.

Transmission Infrastructure

More than 110,000 km of high voltage lines and 164,000 MVA of transformation shape the Mexican transmission grid.  It is divided in 53 transmission areas and 13 transnational interconnection links.


The Mexican Power System has a 2019 aggregated installed capacity of 87,436 MW. Almost 30,000 of them are formed by renewable technologies. Since a significant part of its generation portfolio is obsolete, the effective operational capacity is only 56,000 MW. Significant new capacity requirements are expected in the next decade to fulfill the sustained peak demand increase


System Zone

The system is divided into 10 zones, see the chart below for yearly estimated growth rates.

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2018 Energy Demand

Energy intensive areas in the Central, Occidental and Noreste system zones are almost 60% of the total consumption, and also where most of the infrastructure is concentrated.

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2018 Sector Distribution

Large and medium Industry make up almost 60% of the consumption.

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System ZoneYr Growth 2020 - 2030
SIN3.6 %
Central2.9 %
Oriental3.4 %
Occidental4.2 %
Noroeste3.9 %
Norte3.7 %
Noreste3.7 %
Penisular4.1 %
Baja California4.0 %
Baja California Sur3.7 %

Energy Regulation

The 1975 “Ley de Servicio Público” limited private initiative in the power sector, keeping generation, transmission, distribution and commercialization under public control by means of CFE.

In 2014, the private sector participation in generation and commercialization is allowed by “Ley de la Industria Eléctrica”. Grid business (transmission and distribution) is kept under public ownership. This Law requires a legal separation of all activities associated with the electricity business, entrusting the Energy Regulatory Commission (CRE) as guarantor of this reform and the CENACE as operator of the Wholesale Electricity Market (MEM).

Market Products

Market Products

Based on nodal prices (24/7 nodes in the systems), the production and demand are matched on a Day-Ahead Market and a Real Time Market.

Energy dispatch and prices are based on generation marginal costs, transmission power flows and N-1 reliability criteria.

 Ancillary Services

Secondary Regulation and Rolling and Auxiliary Reserves are dispatached in both Energy Markets itegrating CENACE requirements and generation opportunity cost.


A yearly Capacity Balance Market is organized to set the Capacity Price assuming the actual capacity availability in the critical hours, the Optimal System Reserve Margins and the reference technology LCOE..


CELs are assigned by CRE to each MWh produced by clean energy

SENER sets a yearly purchase obligation to the end users and suppliers. A CEL Balance Market will be soon under operation.

 DFTs (Not Available)

Transmission financial rights (DFTs) provide a risk hedge against marginal price differences between two nodes.

Volatility between nodal prices is mainly caused by congestion, so DFTs set a fixed congestion marginal componets payment.

Long-Term Energy Sales

Long Term Energy Sales Under L.I.E.

Operation under CENACE mechanisms is compulsory for all market participants. Short term market establishes physical delivery obligations for market participants and all physical assets are dispatched under marginal costs supply functions. However, the MEM established market procedures to optimize financial transactions among market participants, the so called Hedge Contracts and its Financial Bilateral Transactions. Using this mechanism it is possible to settle long term conditions for products sale that enable the bankability of a power plant. In order to minimize the exposure on the qualified supplier, it is also possible to secure this structure under the end users supply agreements by means of a Administration Trust.


Financial Bilater Transaction in MEM (Wholesale Electricity Market)

As under any other OTC agreement, they allow market participants to freely settle the financial conditions (price, tenor, reference node, etc.) on any market product, but since the MEM is informed about the product involved, it also provides great advantages in terms of market liquidations and market guarantees


Financial Approach - Trust Structure

Since qualified suppliers in Mexico usually cannot provide a strong balance sheet (new companies that doesn’t have strong physical assets), they secure their Hedge Agreements using their end users guarantees (corporate, liquid and regulatory) through a Trust, that will route the cash flows and guaranteed derived from the Power Supply Agreements. When using these structure to provide financial leverage for a generation project, the CCDE generally is structure under a take-or-pay approach.